Northeast Dairy Compact Set to Expire
WASHINGTON – The Northeast Dairy Compact which New England farmers, consumers and environmentalists say protects stable milk prices, family-run dairy farms and open spaces, will expire in just twothree days (Sept. 30) if Congress does not act.
Daniel Smith, Executive Director and General Counsel of the Northeast Dairy Compact Commission, warned that if Congress does not pass legislation to extend the Compact, “the legal authority of the (Compact) commission is going to expire and it will cease to exist.”
All six New England states currently participate in the Northeast Dairy Compact, which was established in 1997 to help keep the region’s milk prices stable. Dairy farmers in the midwest oppose the Compact by calling is a “dairy cartel.”
Connecticut Senator Christopher Dodd and Sen. Olympia Snowe (R-ME) have written a letter to their Senate colleagues asking for their support in including the extension of the Dairy Compact in any continuing budget resolution or appropriations bill that is considered by Congress in the next few weeks.
“We have at our disposal a tried and tested policy (the Northeast Dairy Compact) with proven results that shows it has improved the lives of fellow Americans,” Dodd and Snowe said in their letter.
The Dairy Compact is usually considered along with the farm bill legislation during the appropriations process. But in the backdrop of the terrorist attacks, Dave Lackey, Snowe’s press secretary, says the farm bill may not be considered until next year, which leaves the status of the Compact in limbo.
Lackey says however that if the Senate does not vote on an extension of the Diary Compact before the end of the week, “Congress could provide authorization …to attach it to other legislation being considered this fall.”
Stephen Burrington, agriculture project director of the Boston-based Conservation Law Foundation, assured farmers that there was no reason to worry if the Compact was not extended as milk prices are expected to remain high in the coming weeks.
“The expiration of the Dairy Compact will not have an immediate impact on farmers,” Burrington said.
Supporters of the Compact say that milk prices remain stable if they are controlled regionally.
“By setting a minimum price of milk at $1.46 per gallon among the Northeast states,” Gabriel Moquin, Deputy Director, Regulation and Inspection, Connecticut’s Department of Agriculture, says, “Connecticut farmers are protected from the wide fluctuations in the federally dictated price paid to farmers for their milk. Anytime, the price falls below that ($1.46 per gallon), the Compact Commission makes up the difference.”
Burrington says the Compact prevents the concentration of dairy farming in six to eight mid-western and western states so that New England has a continued supply of fresh affordable milk.”
He says fresh milk produced locally also increases the quality of milk for consumers and reduces transportation costs. “Those transportation costs could go as high as 60 cents per gallon.” Burrington says. “If you ship milk from Michigan or somewhere in that part of the country, consumers would be paying as much as 40-60 cents per gallon in transportation.”
There are also safety and health concerns to consider, according to Moquin.
“God forbid, if something happens like terrorism or something, we have a local supply of milk we can count on. We don’t have to depend on trucking milk from the Mid-West, says Moquin.”
According to Smith, the federal government had earlier left it to the states to regulate fluid milk prices to account for regional differences. But the courts ruled that individual states cannot regulate milk prices under the interstate commerce clause of the U.S. Constitution and that Congress may authorize regional groupings of states like the Northeast Dairy Compact to regulate milk prices.
Smith says, “Entering into dairy compacts is thus a means for states to obtain from Congress the regulatory authority over their region’s interstate markets for milk.”
The dairy compact also preserves valuable farmlands and open spaces, supporters say, by protecting farms from going out of business
“The extension of the compact is the most important environmental objective for New England in the current session of Congress,” says Burrington. “There are roughly 1.3 million acres of land at stake and most of that, if not all, will be lost to sprawl if dairy farmers go out of business.”
Dodd said in his letter, “Dairy farms are key to our rural communities economic well-being not to mention their cultural and environmental way of life. Accordingly, by saving dairy farms, we save communities.”
Since 1997, when the compact was created, fewer dairy farms went out of business, Dodd said in his letter. Moquin said in the three years preceding the compact’s creation (1995-1998), 52 Connecticut farms went out of business, and in the three years after the creation of the compact (1998-2001), 17 farms went out of business.
Rep. James Maloney says that he strongly supports the Dairy Compact. “It is very clear that the program has been quite successful on the one hand,” he said, “and has not had any significant impact on consumer prices on the other hand. It has been very helpful to farmers too.”
“Along with helping farmers, the Compact is very helpful to us in New England, in terms of quality life,” Maloney said, “We’re trying to everything we can to preserve family farms and preserving open space, diversity of occupations and heritage that we have in Connecticut and New England.”
Opponents of the Northeast Dairy Compact say that the compact benefits only large farmers, creates a surplus of milk ultimately bringing down milk prices in the Midwest, and makes consumers pay higher prices.
“I do not support reauthorizing the Dairy Company and did not support its creation in 1996 because market forces are the best mechanism for determining the price of farm products to both consumers and farmers,” says Rep. Christopher Shays. “We need to eventually end the complex and costly system of supports and subsidies for all farm products.”
“The compact offers marginal assistance to small farms, struggling to sustain themselves economically. But because compacts assess benefits on every gallon of milk sold, they primarily benefit the largest, most financially secure farms, while small struggling farms receive little financial assistance,” insists Shays.
Burrington admits that, “Compact payments are based on the volume of production and so larger farms receive more than smaller farms do,” but says, “Smaller farms in the region have been emphatic that the compact is important to them and need the compact price support. In New England anyhow, large farms aren’t very big. There are small farms and smaller farms.”
Moquin says, “The cost to consumers has been negligible. It’s been pennies per gallon of milk. To the individual consumer, it’s probably less than 10 dollars a year in added costs and I think that’s a very small price to pay to retain local dairy farmers, local milk production and to maintain a way of life.”
